A new bidder emerges as a contender to buy all or part of the troubled retailer JJB Sports, which is up for sale as it sits on the brink of administration.
The owner of Ireland’s biggest sports retailer Stafford Group, which bought Lifestyle Sports, the owner of 62 stores across Ireland, in 2005 for the equivalent then of £48m, is among about half a dozen bidders left in contention.
The Dublin-based company, which has 950 staff, is competing against the rival bids of Mike Ashley, the founder of Sports Direct International and owner of Newcastle United FC, restructuring specialists GA Europe, Hilco, and US retailer Dick’s Sporting Goods.
Frontrunner Sports Direct is believed to be close to arranging to buy the most profitable stores from JJB under a controversial “pre-pack” administration, which would see a potential buyer identified before the process begins.
The deal would reportedly see more than half of JJB’s 180 stores closed and put hundreds of jobs at risk.
But it is likely the Office of Fair Trading will launch an investigation into any attempt by Sports Direct to buy JJB due to competition issues.
Wigan-based JJB, which employs 4,000 staff, put itself up for sale at the end of last month after failing to secure the funds needed to overhaul its stores.
It has confirmed that it was holding talks after receiving offers from a number of potential suitors as it seeks to secure the future of the firm.
The group has already warned shareholders – which include the Bill and Melinda Gates Foundation – they are likely to see their stakes wiped out under any rescue deal.
It is now understood JJB will not be able to stave off administration, but that the “pre-pack” arrangement would allow it to be immediately sold to a pre-determined buyer.
JJB secured its most recent lifeline just four months ago when it landed £20m from US retailer Dick’s Sporting Goods and a further £10m from existing shareholders.
It earmarked £20m of the most recent funding on converting 60 of its most important stores in 2012 and 2013 into a new format that during trials produced much-improved sales and margins.
But it admitted last month that continued poor trading meant it would need additional funds for the programme sooner than it had expected.